Question

Funds required for purchasing current assets is an example of

(a) Fixed capital requirement

(b) Ploughing back of profits

(c) Working capital requirement

(d) Lease financing

Answer 1

Current assets are generally used for the day-to-day operations of a business. The funds that a company requires for undertaking day-to-day operations, such as purchase of raw materials and payment of wages and salaries, are part of its working capital requirements. Thus, the funds that a firm requires for purchasing current assets are part of its working capital requirements.

Hence, the correct answer is option (c).